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Top Canadian investor says U.S. behind in race for infrastructure capital

The United States is lagging behind Canada in the race to attract capital for infrastructure projects despite launching a charm offensive to global investors and reaching out to officials north-of-the-border for advice, a top Canadian investor has said.

GEOFF ROBINS/AFP/Getty Images

The United States is lagging behind Canada in the race to attract capital for infrastructure projects despite launching a charm offensive to global investors and reaching out to officials north-of-the-border for advice, a top Canadian investor has said.

Canada is setting up an infrastructure bank to facilitate private investment in projects such as new roads, bridges and tunnels but faces competition from the United States, where President Donald Trump is planning $1-trillion (U.S.) of infrastructure spending, funded mostly through the private sector.

Bjarne Graven Larsen, chief investment officer at Ontario Teachers' Pension Plan, said Canada has an advantage in already being home to a number of the world's biggest infrastructure investors and having an established track record in utilizing public and private funding to build infrastructure.

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"I think Canada is actually better positioned than the U.S. because there's more institutions already, there's more history around how to do that in Canada compared to the U.S.," said Mr. Larsen, who helps manage assets worth $175.6-billion (Canadian) with the pension plan being one of the world's biggest infrastructure investors.

Mr. Larsen said he and other major Canadian investors recently met with officials, including U.S. Treasury Secretary Steven Mnuchin, at the White House to discuss U.S. infrastructure.

"They acknowledged that Canada is actually ahead of the U.S. in the planning here," Mr. Larsen said.

The infrastructure team in the White House was seeking advice from its Canadian counterparts, as well as Canadian investors, and considering whether they should copy some of the Canadian model, Mr. Larsen added in an interview.

Michael Sabia, chief executive of the Caisse de dépôt et placement du Québec, Canada's second-largest public pension plan, said the United States should look to replicate Canada's model.

"Crowding in private investment from people like us to finance infrastructure makes a world of sense in Canada and it makes a world of sense in the United States," he told reporters after the fund reported second-quarter results on Friday.

Mark Machin, chief executive of the Canada Pension Plan Investment Board, Canada's biggest public pension plan, said he had attended the same meeting with U.S. officials as Mr. Larsen, but felt the United States was some way off from having firm plans in place.

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"I don't think there's a lot of clarity yet on how the Trump plan is going to shape up," he said in an interview on Friday.

Mr. Trump has initiated a "massive permit reform" as part of the U.S. infrastructure plan to speed up construction approval processes and Mr. Larsen agreed that the slow process had previously been a deterrent to international investment in U.S. infrastructure.

"In the U.S., the permitting process was sometimes difficult to figure out. You had to take a lot of different things into consideration," he said. "They actually changed that so there is now one federal permitting body in Washington that's sitting in the executive office next to the White House."

Efforts by the United States to woo foreign investment in infrastructure follow a similar charm offensive from Prime Minister Justin Trudeau, who hosted international investors such as Norway's Norges, which runs one of the world's largest sovereign-wealth funds, the Qatar Investment Authority and Singapore state investor Temasek in Toronto last November.

Canada's efforts are focused around the infrastructure bank, which plans to attract $4 to $5 for every $1 of public funding for infrastructure projects.

"I think it's a very important initiative and we're very supportive of the infrastructure bank," Mr. Larsen said. "We see it as a vehicle that we can potentially invest in."

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